This bank seemed to have a reasonable plan to stabilize itself, but its depositors panicked and almost all of its deposits were uninsured. Insured deposits generally do not run. People have confidence in the FDIC. They're not worried about their insured money, but uninsured deposits can run and most of this was from pretty sophisticated institutional investors: venture capitalists, startups, as you mentioned. That's what I find so astonishing, that there was this herd mentality by sophisticated individuals to take this money out.
You mentioned my books. I also write children's books and I'm thinking maybe I should write one about banking for venture capitalists because their behavior suggests maybe they didn't understand the mechanics about banks where it's a classic Jimmie Stewart problem: you come in and take out all the money at once, you're going to force the bank to close even if it may otherwise be solvent.
~ Sheila Bair, MSNBC
interview, 0:45 mark, March 11, 2023
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